Image Credits: United Forum of Bank Unions | Twitter
The United Forum of Bank Unions (UFBU) has started an agitation programme with a massive demonstration across the country on 14 February 2025 (Photos). The strike will paralyze the entire banking system for four days, as the preceding two days are holidays.
What are the DEMANDS?
• Adequate recruitment in all cadres, regularization of all temporary employees
The banking sector provides secured jobs. In public sector banks, there is a reservation policy for SC, ST, OBC, and the economically weaker sections among the forward castes. Over the last 10 years, employee strength has been steadily decreasing despite a tremendous increase in business.
Deposits and advances have increased by 2.65 times in 10 years. However, the staff strength in PSBs has declined from 842,813 to 746,679 over the same period.
- The number of deposit accounts has grown from 931,315,889 to 1,665,628,000 in 10 years.
- Deposits have risen from ₹5,885,429 crores to ₹12,088,599 crores.
- The number of loan accounts has surged from 7,678,442 to 123,631,582, with credit outstanding increasing from ₹4,598,075 crores to ₹8,755,324 crores.
- The number of accounts handled per employee is now 2,396—six times that of private bank employees. Ten years ago, this number was 1,251, meaning it has nearly doubled.
As a result, bank employees are under severe stress, negatively impacting customer service and significantly deteriorating their work-life balance. They struggle to service small accounts, forcing small borrowers, including MSMEs and farmers, to turn to Non-Banking Finance Companies (NBFCs) and Microfinance Institutions (MFIs). These entities charge high-interest rates and often use coercive recovery methods, prompting state governments like Karnataka to introduce regulations against them. The real solution is to at least double the number of employees in public sector banks to improve service delivery.
Additionally, the number of temporary employees has increased significantly, leaving many without job security or reservation benefits. Banks employ 1,950,765 Business Correspondents who do not receive salaries but rely on small commissions from running Customer Service Points. These correspondents operate under 932 Corporate BCs, including Manappuram Finance and Muthoot Finance, which take a large share of the commissions.
This practice contradicts the objectives of nationalization and the principles enshrined in the Constitution. It has also led to an increase in fraud cases, affecting both employees and the public, who have lost their money.
• Implementation of a five-day workweek in the banking industry
The bipartite settlement signed on March 8, 2024, between the Indian Banks’ Association (IBA) and Unions and Associations, with the consent of the Finance Ministry, agreed to implement a five-day workweek in banks. Nearly a year has passed, but the agreement has yet to be implemented. A bipartite agreement cannot be violated under the Trade Union Act, yet the government remains indifferent.
The Minister of State for Finance stated that the government must consider customers’ needs. However, if that were the case, why was the agreement signed in the first place? Was it merely an election gimmick?
The Union Government, most state governments, insurance companies, RBI, NABARD, SIDBI, foreign banks, international currency exchanges, and stock markets already operate on a five-day workweek. Many countries have even introduced four-day workweeks. With 205,727 ATMs (as of March 2024), online banking, internet banking, and the much-acclaimed digitalization, customers already have 24/7 banking options.
This has been a long standing demand and the employee’s who are overburdened with work require rest, recuperation and work life balance to take care of the family.
• Immediate withdrawal of the recent DFS directives on performance review and PLI, which threaten job security, create division and discrimination amongst employees and officers, violate the 8th Joint Note, and undermine PSBs’ autonomy
This government claims from the rooftops that they have given autonomy to banks and do not interfere, but a recent directive to provide Production Linked Incentives (PLI) to senior officers and executives—in violation of a signed agreement to provide PLI to all employees—has irked the employees. Banking is teamwork, and the real groundwork is handled by juniors. Creating division will harm the bank’s performance. Favoritism and unethical practices to obtain incentives will emerge.
Hence, the Department of Financial Services (DFS) must walk the talk, withdraw this directive, and stop interfering with service conditions, which have long been governed by bipartite settlements and joint notes between unions and associations. DFS itself is a party to these agreements and clears them before signing.
• Safety of bank officers/staff against assault/abuse by unruly banking public
Assaults on bank officers and staff have increased since this government came to power, particularly in BJP-ruled states. Customer service is often affected due to staff shortages. Additionally, pressure to disburse MUDRA loans by ruling party cadres exacerbates the situation. Suresh Gopi, now a Minister of State, had publicly threatened bankers in Thrissur earlier.
PSBs are arms of the state, and officers should be treated on par with government employees, especially when they are restrained from carrying out their duties. However, this is often not done. The new law, Bharatiya Nyaya Sanhita 2023, does not explicitly include bankers, which should be rectified.
This issue must be addressed immediately, as bank staff are executing government instructions, implementing government schemes, and managing more than 48 crore Jan Dhan accounts. They even perform election duties as Presiding Officers and Counting Staff.
• Fill up the posts of Workmen/Officer Directors in PSBs
When the Nationalisation Act was presented in Parliament by Prime Minister Indira Gandhi, Socialist MP Madhulimaiyye proposed an amendment to provide for a Non-Workmen Director and a Workmen Director based on the principle of workers’ participation in management. This was accepted and implemented in all Public Sector Banks (PSBs) from 1970, including the State Bank of India (SBI).
The majority associations and unions recommend candidates for appointment as Board Directors, playing a constructive role and acting as watchdogs.
However, since 2014, the party in power has violated this law. Despite multiple representations to the government, the issue remained unresolved. In 2017, the All India Bank Officers’ Confederation (AIBOC) approached the Delhi High Court (Case No: 9749/2017), which directed the government to implement the law. Seven years have passed. 25 hearings have taken place. Around 25 advocates appear in each hearing, representing the government, RBI, and banks. Most banks have submitted recommendations following laid-down procedures. In many cases, the RBI has given clearance.
Despite this, the government continues to plead for time on various pretexts. Currently, names for appointment in nine banks are pending approval by the Appointments Committee of the Cabinet (ACC), chaired by the Prime Ministerand with the Home Minister as a member. The court has now issued an ultimatum, with the next hearing scheduled for March 5. No Government in the past has violated the laws of the nation except this one. An immediate resolution is required.
There is no difficulty except the mindset to keep the Bank Boards opaque to keep favouring their Corporate friends and write off huge amounts without proper scrutiny.
Resolution of residual issues pending with IBA
In the bipartite settlement and Joint Note signed on March 8, 2024, several issues remain unresolved, such as:
- Updation of pension for retirees at par with RBI and the government
- Option for reverting to the Old Pension Scheme
- Monetization of Leave Travel Concession
- Outsourcing
- Facilities for disabled employees
- Allocation for the welfare fund
Almost a year has passed, and these demands require urgent attention.
• Amend the Gratuity Act to increase the ceiling to ₹25 lakhs, in line with the scheme for government employees, along with exemption from income tax
Whenever gratuity is increased for government employees, it must also be extended to bank employees. During the last revision, the Law Ministry clarified that there was no need to amend the Gratuity Act—a Government Order (GO)would suffice. However, this has been forgotten.
As per definition, gratuity is an amount paid to an employee when they leave the job after at least five years as a token of appreciation for their service. For the hard work of bank employees, gratuity is paid, and it should be on par with government employees, who are not taxed on gratuity.
This unnecessary delay affects those retiring before the amendment is enacted. This is stepmotherly treatment—favoring corporates and the private sector at the cost of bank employees.
• Do not recover income tax on staff welfare benefits given to employees and officers on concessional terms. Management should bear the same.
This government is insisting that welfare benefits given to staff—such as concessional interest on loans—should be taxed. AIBOC has submitted a memorandum to the Finance Minister, explaining why these should be exempted from perquisite tax.
(Excerpt from the memorandum:) “We, representing the officers of Public Sector Banks, write to you with great concern regarding the taxation of various perquisites extended to bank employees, such as loans at concessional interest rates, rent-free accommodation incidental to transfers, reimbursement of fuel expenses for official vehicle use, and other fringe benefits essential for discharging our official duties. The provisions under Section 17(2) and Rule 3(7)(i) of the Income Tax Act are causing severe financial distress among bank employees and are perceived as discriminatory compared to other sectors.
Bank employees—the backbone of economic growth—are diligent taxpayers and responsible citizens of this country. Almost all Public Sector Bank officers fall under the 30% income tax bracket, contributing significantly to national revenue. In addition to income tax, we are subjected to GST, professional tax, house tax, water tax, property tax, education cess, toll tax, vehicle tax, etc. It is also pertinent to mention that our expenditure directly fuels economic growth, as our salaries are largely spent within the domestic economy.
However, despite our commitment to nation-building, our earnings and benefits are steadily eroding due to unfair taxation policies imposed through the tax on perquisites.
Until 1979, bank officers’ salaries were higher than those of Class I Government Officers due to the inherent risks and responsibilities in banking. Over time, successive Pay Commissions for government officers and restrictive wage settlements in banks have resulted in our salaries falling significantly behind. The wage load toward superannuation has been restricted to 2-3%, reducing our basic pay substantially. Unlike Central Government employees, our benefits have been curtailed despite rising inflation and increasing work pressure. As a result, perquisites have served as partial compensation for our lower salaries. However, with the recent taxation on these perquisites, we feel unfairly penalized.
We also wish to draw your kind attention to similar facilities provided to employees/officers in other sectors that are not subject to tax. For instance, railway employees receive free tickets/passes for themselves and their family members, employees of the telecommunications sector receive free call units or zero meter rent, electricity company employees receive subsidized/free electricity, educational institutions offer free education to employees’ children, and the healthcare sector provides medical treatment at reduced costs.
Since we are part of the financial sector, it is only fair that we receive financial products at a lower cost. It is important to note that the cost of any financial product includes delivery costs and risk coverage. In the case of staff loans, the cost of delivery is negligible as they require no publicity or marketing and are fully secured—either by a lien on our superannuation benefits or by insurance. These loans bear no cost of recovery, as repayments are directly deducted from employees’ salaries. On one hand, loans are being extended to other sectors at highly concessional interest rates despite the risk of non-repayment, while on the other hand, bank employees are being taxed on concessional loans that are fully secured.
The RBI’s BSR-1 Report reveals that 499 loans above ₹100 crore were sanctioned at interest rates below 5%. Many of these loans have turned into NPAs, with massive haircuts through NCLT resolutions. Meanwhile, bank employees—who have no risk of default—are burdened with additional taxation. We have received feedback from grassroots-level employees who feel demoralized by this discriminatory taxation system.
It is a well-accepted practice across industries to provide job-specific incentives to retain talent and recognize contributions. Any perquisite provided to bank officers/employees is incidental to their job, as they frequently relocate due to the transferable nature of their work.”
This requires serious consideration by the Government.
• Maintain a minimum of 51% of Equity Capital in IDBI Bank by the Government
IDBI Bank is a government-owned bank. When it faced financial difficulties, LIC was asked by the government to infuse funds, and the management of the bank was handed over to LIC, which successfully turned it around.
Now, the government has proposed selling its 30.48% stake along with LIC’s 30.24% stake, which is insane. Why sell a profit-making bank and lose income? Why should LIC, which has proven its mettle in banking, be forced to sell its stake?
This must be stopped.
The United Forum of Bank Unions (UFBU) is also OPPOSING:
- Micromanagement of PSBs by DFS on policy matters affecting the service conditions of employees and officers, thereby undermining bilateralism.
- Outsourcing permanent jobs in banks.
- Unfair labour practices in the banking industry.
Bank employees are united. The strike will be a tremendous success, and the economy will be affected. If the government does not accede to the demands, there will be more strikes, potentially leading to an indefinite strike.
The government must act immediately.
Thomas Franco is the former General Secretary of the All India Bank Officers’ Confederation and a Steering Committee Member at the Global Labour University.
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